The well recognised and long-standing approach has been for casual employees to receive an attractive loading to compensate for benefits typically enjoyed by permanent employees, including annual leave and sick leave.
Nevertheless, in the WorkPac decision, the Full Federal Court held that a casual employee was entitled to accrued benefits (enjoyed by permanent employees) such as annual leave, based on the fact that the employee’s ‘work patterns were regular and sufficiently predictable’ and that there was an expectation of ongoing work given a 12-month roster provided in advance. Some of the key points to emerge from WorkPac, and consistent with our current law, are as follows:
- The essence underpinning casual employment is that an employee has not received a firm advance commitment from their employer indicating ongoing work relevantly according to an agreed pattern of work;
- Key indicators of an absence of firm advance commitment include irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability;
- Repetition of certain work patterns may be indicative of the true nature of the relationship and the intention of the parties;
- The variation of an employee’s work patterns over time as circumstances change could in fact constitute ‘permanency’ even if the employee was initially casual, which means employers have to be open to conducting regular reviews to determine if such a variation or transition has in fact occurred; and
- The National Employment Standards (NES) takes primacy over any employment contract, modern award, or industrial agreement.
Recently, a New South Wales’ peak business organisation, the New South Wales Business Chamber Limited (NSWBC) has applied to the Fair Work Commission (FWC) to alter existing modern awards to specifically include provisions for a Perma-Flexi Proposal for casuals who are on regular rosters over extended periods of time. These variations, if adopted, would include:
- Hours of work to increase or decrease based on operational requirements, without the payment of overtime entitlements;
- Employees’ entitlement to accrued benefits such as annual, personal compassionate and community services leave as prescribed by the NES;
- Employees’ entitlement to notice of termination and redundancy provisions consistent with permanent employees;
- Employees are to be rostered as needed, subject to the minimum engagement and rostering principals as prescribed by the applicable modern award;
- Employees’ entitlement to a 10% flexible loading to compensate for the potential fluctuation of hours; and
- The recommended 10% loading would replace the 25% casual loading which currently compensates for paid leave. It is argued that this would (i) protect employers from being exposed to employees ‘double-dipping’ by receiving contemporaneous benefits as a casual and as a permanent employee when in fact these benefits are mutually exclusive; and (ii) minimise an employer’s exposure to claims for unpaid leave entitlements from employees currently employed on a casual basis.
The NSWBC’s submissions identified industries that may potentially be affected by the Perma-Flexi Proposal namely: retail, security services, aged care, social, community and disability services currently regulated by the following modern awards:
- Social, Community, Home Care and Disability Services Industry Award 2010;
- Aged Care Award 2010;
- Securities Services Industry Award 2010;
- Contract Call Centres Award 2010; and
- General Retail Industry Award 2010.
Some employers have argued that the NSWBC’s Perma-Flexi Proposal may lead to adverse consequences including casual employees attempting to claim for paid leave benefits from years ago. Some business groups have estimated the knock-on effect of any Perma-Flexi Proposal, if granted by the FWC, could lead to ‘annual leave liabilities’ of up to $8 billion, severely impacting small and medium enterprises.
Others have recommended amending the Fair Work Act 2009 (Cth)(FW Act) to provide clarity and protection for employers so that if an employee is engaged as a casual and paid accordingly, then the employee is a casual or all relevant purposes under the FW Act.
Points for employers to consider
For those Employers whose workforce includes a component of casual employees, and where the current work patterns are not irregular, uncertain, unpredictable, intermittent or discontinuous, (i) consider the need for advice as to the true nature of the employment relationship; and/or (ii) revisit the terms of any employment documentation to assess whether it reflects the actual relationship between the parties.
We look forward to updating our clients on any further WorkPac related litigation as well as the outcome of the NSWBC proceedings before the FWC.
For any further information or assistance please contact one of our experienced Employment & Workplace Relations team members on (08) 9321 0522.